Priority over common stock Usually has a fixed dividend rate Preferred Stock

Priority over common stock usually has a fixed

This preview shows page 39 - 51 out of 53 pages.

Priority over common stock Usually has a fixed dividend rate Preferred Stock Different voting rights 1 Analyze Liabilities Assets = Stockholders’ Equity + Cash +19,704,000 Preferred Stock +400,000 Additional Paid-in Capital +19,304,000 2 Record Cash Preferred Stock Additional Paid-in Capital 400,000 19,304,000 19,704,000
Image of page 39

Subscribe to view the full document.

Preferred Stock Redemption National Beverage redeemed 120,000 shares of its $1 par value preferred stock for $6,000,000 in 2016. 1 Analyze Liabilities Assets = Stockholders’ Equity + Cash −6,000,000 Preferred Stock −120,000 Additional Paid-in Capital −5,880,000 2 Record Preferred Stock Additional Paid-in Capital Cash 6,000,000 120,000 5,880,000
Image of page 40
Amount of Preferred Dividend Dividend = Dividend Rate x Total Par Value of Preferred Stock Assume F Co. has 10,000 shares of $50 par, 7% preferred stock. What is the annual amount of the preferred stock dividend?
Image of page 41

Subscribe to view the full document.

Preferred Stock Dividends Current Dividend Preference: The current preferred dividends must be paid before paying any dividends to common stock. Cumulative Dividend Preference: Any unpaid dividends from previous years ( dividends in arrears ) must be paid before common dividends are paid. If the preferred stock is noncumulative , any dividends not declared in previous years are lost permanently. 11-48
Image of page 42
In addition to its common stock, National Beverage has $1 par value cumulative preferred stock with a 7 percent dividend rate. Assume 100,000 of these shares are outstanding, one year of dividends are in arrears, and the board of directors just declared total dividends of $400,000. How much will each class of stock receive? Preferred Stock Dividends 11-49
Image of page 43

Subscribe to view the full document.

Preferred Stock Dividends 11-50
Image of page 44
In addition to its common stock, National Beverage has $1 par value noncumulative preferred stock with a 7 percent dividend rate. Assume 100,000 of these shares are outstanding. Dividends were not paid last year. The board of directors just declared total dividends of $400,000. How much will each class of stock receive? Preferred Stock Dividends 11-51
Image of page 45

Subscribe to view the full document.

Preferred Stock Dividends 11-52
Image of page 46
Retained Earnings Total cumulative amount of reported net income less any net losses and dividends declared since the company started operating Baker Company incurred a loss of $120,000 in 2017 that resulted in an Accumulated Deficit in Retained Earnings. Baker Company Comparative Balance Sheets (Partial) For Year Ended December 31 Stockholders’ Equity Common Stock Additional Paid-in Capital Retained Earnings (Deficit) Total Stockholders’ Equity 2018 $ 100,000 750,000 50,000 900,000 2017 $ 100,000 750,000 (70,000) 780,000
Image of page 47

Subscribe to view the full document.

Statement of Stockholders’ Equity
Image of page 48
Learning Objective 11-5 Analyze the earnings per share (EPS), return on equity (ROE), and price/earnings (P/E) ratios.
Image of page 49

Subscribe to view the full document.

Net Income − Preferred Dividends Average Number of Common Shares Outstanding EPS = National Beverage’s income for 2016 was $61.2 million, preferred dividends of $0.20 million, and the average number of shares outstanding during the year was 46.6 million.
Image of page 50
Image of page 51
  • Fall '11
  • Pizza

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes